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Wells Fargo Says Oakland’s Latest Loan Bias Suit Still Won’t Fly

Wells Fargo has asked a federal judge to throw out Oakland’s claims that biased lending
damaged the city’s economy, a question at the center of several such suits against
banks.

The case before Judge Edward M. Chen of the U.S. District Court for the Northern District
of California tests what Oakland and similar city-plaintiffs must do to press ahead
with Fair Housing Act lawsuits alleging economic harm that they blame on lending discrimination
(
Oakland v. Wells Fargo Bank N.A.
, N.D. Cal., motion to dismiss
10/6/17
).

In a May ruling,
Bank of Am. Corp. v. City of Miami,
the U.S. Supreme Court said suits alleging financial harm under the Fair Housing
Act must establish a causal connection between the alleged wrong and the claimed injury.
Simply claiming that harm was foreseeable isn’t enough, the court said.

The Supreme Court gave lower courts the task of fleshing out what that standard meets
in practice. Wells Fargo said Oakland’s suit, originally filed in 2015 but amended
and refiled in August, still falls short. “The amendments Oakland has made in reaction
to the
City of Miami decision do not allege a direct causal connection sufficient to meet that case’s
proximate cause standard,” Wells Fargo said.

Oakland claims Wells Fargo steered minority borrowers into mortgage loans that were
offered on discriminatory terms. Oakland, like other city-plaintiffs, says it suffered
economic harm in the form of higher city expenditures, a drop-off in tax revenues,
and other ills it blames on Wells Fargo’s alleged practices.

However, Wells Fargo’s motion urged the court to hold that Oakland’s suit should be
thrown out right away. Chen has ordered briefing on that question throughout the rest
of this month, and has scheduled a hearing on the motion for Dec. 14. Any decision
he renders will be watched closely not just by Wells Fargo, but also by Bank of America,
JPMorgan Chase, Citigroup, and other banks facing similar Fair Housing Act lawsuits
brought by Atlanta, Philadelphia, Chicago, and other jurisdictions.

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